MBS MID-DAY: Here's What's Really Moving Markets Today (And it's NOT China)

It's not that China isn't an important cog in the global economy, but the tendency for major media outlets to focus on it as some sort of central market mover is hopelessly overblown at best.  As you may have seen (or as you may have deduced from what I'm writing right now), there's more than a little bit of this overfocus on China in the news this morning.  The easiest way to address this is probably with a chart that shows just how much US markets don't give a damn.

Gosh... Ya'd think if the 5% drop in Chinese stocks today is being credited for a bond market rally that the 23+% improvement since mid-November would have resulted in something other than a bond market rally.  Do we really care about whatever happened in that tiny white circle in the chart above considering everything that came before?  No... markets didn't care then, and they don't care now.  Food for thought: in the time that it took for the Shanghai Composite to fall 5% today, S&P futures moved from 2055 to 2054.75.  10yr yields moved from 2.266 to 2.264. 

European markets have been far more relevant as German Bunds made another all-time low today.  THAT'S significant.  Most everything else is not.  A close second is the "stock lever" as US and EU equities prices did a solid job of tracking with bond yields through the EU equities closing bell.  This isn't up for discussion or debate.  It's simply fact.  Feel free to print out the following chart and tape it to the forehead of anyone droning on and on about China today.  But first, let them know that it shows the DAX and 10yr yields tracking PERFECTLY through the European stock close, at which point US markets begin to do more of their own thing.